With criticism, state conditionally approves Trenton hotel funding

TRENTON — Department of Community Affairs Director Thomas Neff asked, “You’re not like buying soap and shampoo with this money, right?”

What Neff might be surprised find out in the next day or so is the Local Finance Board did in fact conditionally approve funding Wednesday afternoon to buy soap and shampoo, in addition to shower caps, lotion, mouthwash, cotton balls, deodorant, ear swabs, and maxi pads as part of transition costs to replace Marriott identity items with ones from Wyndham.

The reason the LFB failed to see these items included in a $275,000 line item was the Lafayette Yard Community Development Corporation, which owns the struggling hotel, failed to provide the state board a breakdown of the $3 million bond it is requesting for transition and renovation costs in its application to the LFB.

“There’s not one sentence in here that says what the $3 million is being spent on,” Neff said of the 10-page application, adding for a long time the LYCDC has not provided sufficient information about the hotel to the LFB. “In the future, these things need to come across sooner.”

Due to the discrepancy, the LFB conditionally approved the funding — called “baby steps” by Neff — with strings attached.

The conditions include the DCA and New Jersey Economic Development Authority to review all the expenses to see if the $3 million requested is necessary and/or could be reduced when the agencies review the proper documentation, if there is a more viable brand than Wyndham and if the LYCDC conducted its due diligence properly.

LYCDC Chairwoman Joyce Kersey said the board would provide the state with the proper documentation by Wednesday.

Kersey said after the LFB meeting she was happy with the outcome.

“Had we known that they needed that level of information, we would have provided it,” Kersey said.

When asked what could happen to Wyndham if the state reduces the funding request, Kersey responded, “I’ll give them the information and then it’s in their hands.”

Another hurdle the funding faces is final approval from city council.

Last month, only four members preliminary approved the $3 million bond for the hotel.

Two-thirds of the governing body or five votes is required for final adoption for a bond ordinance, so another vote will need to be secured or the measure will die.

Marriott is scheduled to pull out of the city’s hotel Friday at midnight.

The hotel will then run independently as Wyndham sits on the sidelines waiting to see if city council will approve the $3 million bond for renovation and transition costs.

In the meantime, the hotel will be called the Lafayette Yard Hotel & Conference Center.

The president of Marshall Hotels & Resorts, which is the new management group of the hotel, warned of the hotel running independently for a period of time.

“The problem with an independent hotel is we’re not going to be able to increase the value of the real estate asset,” CEO Michael Marshall said. “What we’re trying to get to here is by going with Wyndham, which is considered an upper-scale chain hotel, we’ll be able to increase the value of the real estate asset.”

The 197-room hotel, which opened in 2002, is plagued with approximately $30 million in debt, which includes a $13.375 million city bond, a combined $9 million in state loans and more than $7.3 million owed in a note to the Trenton Parking Authority.

A city financial services group, LMCK Partners, appeared before the LYCDC board Monday, to propose some options to help the struggling hotel, including some discussion of bankruptcy.

Neff wanted to make sure Wednesday that thought was out of everyone’s head.

“If people are thinking about pursuing bankruptcy, they should just stop because everybody’s got to make their payments,” Neff said. “Hopefully, LYCDC makes that point publicly when people bring up bankruptcy.”

Neff also cautioned against a comment that came out of LYCDC board member John Hatch’s mouth at Monday’s meeting, stating if the city didn’t guarantee the bonds on the hotel, “the state is going to pay it.”

“The legislature gets to make that determination,” Neff said, adding the legislature and governor changes every so often. “I ask for some sensitivity.”

Neff said the state’s position is it does not want to see the hotel close.

“But what we do want at the end of the day for there to a realistic plan to convert this hotel into either something that’s profitable and not burdening the taxpayer resources, then let’s figure out how to turn it into something else if that’s the case,” he said. “There’s significant state dollars involved in this hotel.”